Steady supply of new hotel rooms in the north of the city and subsequent migration of offices of several key corporates has led to a correction in room rates in luxury hotels in south Mumbai following reduced demand.
New hotel properties in the city have come up only in the suburbs in the past few years, even as the south got only one addition. Corporate traffic has moved to more affordable places, up north of the city.
For instance, rooms in the heart of the city, which once commanded over Rs 10,000 a night, are today offered at around Rs 7,000 by the Trident, Nariman Point. The hotel, owned and operated by the Oberoi Hotels Group, is a prime property, a stone's throw away from the sea.
|SOUTHERN LIGHTS BLINKING|
More, the executive club room at the ITC Grand Central, Parel can be had for less than Rs 6,500 a night, whereas for an identical room at the ITC Maratha, Andheri, the rates start at Rs 10,500.
"One of the key trends observed across the hotel market this year was the sharp drop in room night demand for south and central Mumbai hotels. This was on account of several companies opting to shift base to the new Bandra-Kurla Complex and new state-of-the-art commercial spaces in Andheri,” said a report by Federation of Hotels and Restaurant Association of India (FHRAI).
Driven by the need for cheaper real estate and bigger space, a number of companies, who had expansive offices in the south, have moved to the suburbs. Demand for office space in commercial areas, such as Andheri and Bandra-Kurla Complex, has increased substantially.
Some of the several that migrated to the north of late are Standard Chartered Bank, Morgan Stanley, Deutsche Bank, Citigroup, Hindustan Unilever, Motilal Oswal, JP Morgan and UBS.
"Consequently, the north Mumbai hotels witnessed an increase in demand, with almost all hotels showing stable-to-marginal growths in occupancy," added the report.
New luxury properties in the suburbs are Sofitel (BKC), Trident (BKC), Courtyard by Marriott (Andheri), Holiday Inn (Andheri), Hilton (Andheri) and Westin (Goregaon). Many more non-five star properties have also sprung.
Experts say luxury properties in the south could witness sustained pressure as more properties, such as Taj Hotel (Taj GVK Group airpoprt hotel), Sofitel Mulund, Taj Lands End (Sea Rock redevelopment), are coming up in the suburbs.
As for the new properties in the south, only a Shangri-La opened last month in Worli; it was a limited opening. The property charges Rs 11,500 a night. More, construction on the the proposed Park Hyatt in New Marine Lines is yet to start.
"A number of luxury hotels are available in the vicinity of the airport today, so guests do not need to travel south for their meetings or conferences. Improvement in road travel has not kept pace with the addition of vehicles on the road, leading to traffic snarls", said a city-based hotelier.
“As new hotels enter the market in late 2013/14, we expect the city to witness some occupancy and average rate pressure before stabilising in the long term. Overall, considering the large-scale commercial developments planned in various pockets of the city and the buoyant nature of the market, our long-term outlook for Mumbai remains positive,” added the FHRAI report.